[Federal Register Volume 63, Number 133 (Monday, July 13, 1998)]
[Notices]
[Pages 37528-37532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18597]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
[A-570-815]
Sulfanilic Acid From the People's Republic of China; Preliminary
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of Antidumping Duty
Administrative Review.
-----------------------------------------------------------------------
SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on sulfanilic acid
from the People's Republic of China. The review covers exports of this
merchandise to the United States for the period August 1, 1996 through
July 31, 1997, and thirteen firms: China National Chemical Import and
Export Corporation, Hebei Branch (Sinochem Hebei); China National
Chemical Construction Corporation, Beijing Branch; China National
Chemical Construction Corporation, Qingdao Branch; Sinochem Qingdao;
Sinochem Shandong; Baoding No. 3 Chemical Factory; Jinxing Chemical
Factory; Zhenxing Chemical Factory; Mancheng Xinyu Chemical Factory,
Shijiazhuang; Mancheng Zinyu Chemical Factory, Bejing; Hainan Garden
Trading Company; Yude Chemical Company and Shunping Lile. The
preliminary results of this review indicate that there were dumping
margins for the two responding parties: Yude Chemical Company (Yude)
and Zhenxing Chemical Factory (Zhenxing), and for the ``PRC
enterprise.''
We invite interested parties to comment on these preliminary
results.
[[Page 37529]]
Parties who submit arguments in this proceeding are requested to submit
with the argument (1) a statement of the issue and (2) a brief summary
of the argument.
EFFECTIVE DATE: July 13, 1998.
FOR FURTHER INFORMATION CONTACT:
Kristen Stevens, Nithya Nagarajan, or Doug Campau Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue N.W., Washington, DC
20230; telephone: (202) 482-3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all ctitations to the Department's regulations are to the
current regulations, published in the Federal Register on May 19, 1997
(62 FR 27296).
Background
On August 4, 1997, the Department of Commerce (the Department)
published in the Federal Register (62 FR 41925) a notice of
``Opportunity to Request Administrative Review'' for the August 1, 1996
through July 31, 1997, period of review (POR) of the antidumping duty
order on Sulfanilic Acid from the People's Republic of China, 57 FR
37524 (1992). In accordance with 19 CFR 351.213, Zhenxing Chemical
Industry Co. (Zhenxing), PHT International and the petitioners, Nation
Ford Chemical Company, requested a review for the aforementioned
period. On September 25, 1997, the Department published a notice of
``Initiation of Antidumping Review.'' 62 FR 50292. The Department is
now conducting a review pursuant to section 751(a) of the Act. On
October 14, 1997, Yude Chemical Industry Company (Yude) reported that
it had made no sales of subject merchandise to the United States during
the POR.
Scope of Review
Imports covered by this review are all grades of sulfanilic acid,
which include technical (or crude) sulfanilic acid, refined (or
purified) sulfanilic acid and sodium salt of sulfanilic acid.
Sulfanilic acid is a synthetic organic chemical produced from the
direct sulfonation of aniline with sulfuric acid. Sulfanilic acid is
used as a raw material in the production of optical brighteners, food
colors, specialty dyes, and concrete additives. The principal
differences between the grades are the undesirable quantities of
residual aniline and alkali insoluble materials present in the
sulfanilic acid. All grades are available as dry, free flowing powders.
Technical sulfanilic acid, classifiable under the subheading
2921.42.24 of the Hamonized Tariff Schedule (HTS), contains 96 percent
minimum sulfanilic acid, 1.0 percent maximum aniline, and 1.0 percent
maximum alkali insoluble materials. Refined sulfanilic acid, also
classifiable under the subheading 2921.42.24 of the HTS, contains 98
percent minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25
percent maximum alkali insoluble materials.
Sodium salt (sodium sulfanilate), classifiable under the HTS
subheading 2921.42.79, is a powder, granular or crystalline material
which contains 75 percent minimum equivalent sulfanilic acid, 0.5
percent maximum aniline based on the equivalent sulfanilic acid
content, and 0.25 percent maximum alkali insoluble materials based on
the equivalent sulfanilic acid content.
Although the HTS subheadings are provided for convenience and
customs purposes, our written description of the scope of this
proceeding is dispositive.
This review covers thirteen producers-exporters of Chinese
sulfanilic acid. The review period is August 1, 1996 through July 31,
1997.
Verification
As provided in section 782(i) of the Act, we verified information
provided by the Respondent using standard verification procedures,
including on-site inspection of the manufacturer's facilities and the
examination of relevant sales and financial records. Our verification
results are outlined in verification reports in the official file for
this case (public versions of these reports are on file in room B-099
of the Department's main building).
Separate Rates
To establish whether a company is sufficiently independent to be
entitled to a separate rate, the Department analyzes each exporting
entity in a nonmarket economy (NME) country under the test established
in the Final Determination of Sales at Less Than Fair Value: Sparklers
from the People's Republic of China, 56 FR 20588 (May 6, 1991)
(Sparklers), as amplified by the Final Determination of Sales at Less
Than Fair Value: Silicon Carbide from the People's Republic of China,
59 FR 22585 (May 2, 1994) (Silicon Carbide). Under this policy,
exporters in NME countries are entitled to separate, company-specific
margins when they can demonstrate an absence of government control,
both in the law (de jure) and in fact (de facto), with respect to
exports of the subject merchandise. Evidence supporting, though not
requiring, a finding of de jure absence of government control includes:
(1) An absence of restrictive stipulations associated with an
individual exporter's business and export licenses; (2) any legislative
enactments decentralizing control of companies; and (3) any other
formal measures by the government decentralizing control of companies.
De facto absence of government control with respect to exports is based
on four criteria: (1) Whether the export prices are set by or subject
to the approval of a government authority; (2) whether each exporter
retains the proceeds from its sales and makes independent decisions
regarding the disposition of profits and financing of losses; (3)
whether each exporter has autonomy in making decisions regarding the
selection of management; and (4) whether each exporter has the
authority to sign contracts and other agreements.
Yude and Zhenxing were the only companies to respond to the
Department's request for information. We have found that the evidence
on the record demonstrates an absence of government control, both in
law and in fact, with respect to their exports according to the
criteria identified in Sparklers and Silicon Carbide for this period of
review, and have assigned to these companies a single separate rate.
(See ``Collapsing'' section, below). For further discussion of the
Department's preliminary determination that these two companies are
entitled to a separate rate, see Decision Memorandum to Joe Spetrini,
Assistant Deputy Secretary, DAS III, dated July 6, 1998, and titled
``Separate rates in the 1996/1997 administrative review of sulfanilic
acid from the People's Republic of China.'' This memorandum is on file
in the Central Record Unit (room B-099 of the Main Commerce Building).
Collapsing
We have determined, after examining the relevant criteria, that
Yude and Zhenxing, are affiliated parties within the meaning of section
771(33)(F) of the Act. We have further determined that these affiliated
producers should be treated as a single entity (i.e., ``collapsed'')
for purposes of assigning an antidumping margin in this review. Section
351.401(f) of the Department's antidumping regulations provides that
the Department ``will treat two or more affiliated producers as a
single entity where those producers have production
[[Page 37530]]
facilities for similar or identical products that would not require
substantial retooling of either facility in order to restructure
manufacturing priorities and the Secretary concludes that there is a
significant potential for the manipulation of price or production.'' 62
FR at 27410. In identifying the potential for manipulation of price or
production, section 351.401(f)(2) provides that the Department may
consider the following factors: level of common ownership; whether
managerial employees or board members of one of the affiliated
producers sit on the board of directors of the other affiliated person;
and whether operations are intertwined, such as through the sharing of
facilities or employees, or significant transactions between the
affiliated parties. A full discussion of our conclusions, requiring
reference to proprietary information, is contained in a Department
memorandum in the official file for this case (a public version of this
memorandum is on file in room B-099 of the Department's main building).
Generally, however, we have found that: Yude and Zhenxing are
``affiliated'' parties, substantial retooling would not be necessary to
restructure manufacturing priorities and there is potential for
manipulating price and production between the two producers. As a
result we are collapsing Yude and Zhenxing for purposes of conducting
the 1996/1997 administrative review.
Use of Facts Otherwise Available
All firms that have not demonstrated that they qualify for a
separate rate are deemed to be part of a single enterprise under the
common control of the government (the ``PRC enterprise''). Therefore,
all such entities receive a single margin, the ``PRC rate.'' We
preliminarily determine, in accordance with section 776(a) of the Act
that resort to the facts otherwise available is appropriate in arriving
at the PRC rate because companies deemed to be part of the PRC
enterprise for which a review was requested have not responded to the
Department's antidumping questionnaire.
Where the Department must resort to the facts otherwise available
because a respondent fails to cooperate by not acting to the best of
its ability to comply with a request for information, section 776(b) of
the Act authorizes the Department to use an inference adverse to the
interests of that respondent in choosing from the facts available.
Section 776(b) also authorizes the Department to use, as adverse facts
available, information derived from the petition, the final
determination, a previous administrative review, or other information
placed on the record. The Statement of Administrative Action (SAA)
accompanying the URAA clarifies that information from the petition and
prior segments of the proceeding is ``secondary information.'' See
H.Doc. 3216, 103rd Cong. 2d Sess. 870 (1996). If the Department relies
on secondary information as facts available, section 776(c) provides
that the Department shall, to the extent practicable, corroborate such
information using independent sources reasonably at its disposal. The
SAA further provides that ``corroborate'' means simply that the
Department will satisfy itself that the secondary information to be
used has probative value. However, where corroboration is not
practicable, the Department may use uncorroborated information.
In the present case the Department has based the margin on
information in the petition. See Notice of Final Determination of Sales
at Less Than Fair Value: Circular Welded Non-Alloy Steel Pipe from
South Africa, 61 FR 24272 (May 14, 1996). In accordance with section
776(c) of the Act, we corroborated the data contained in the petition,
as adjusted for initiation purposes, to the extent possible. The
petition data on major material inputs are consistent with Indian
import statistics, and also with price quotations obtained by the U.S.
Embassies in Pakistan and India. Both of these corroborating sources
were placed on the record during the investigation and have been added
to the record of this review. In addition, we note that the petition
used World Bank wage rates which we have repeatedly found to be a
probative source of data. Based on our ability to corroborate other
elements of the petition calculation, we preliminarily find that the
information contained in the petition has probative value. However, we
will continue to evaluate this information on the basis of more current
data.
Accordingly, we have relied upon the information contained in the
petition. We have assigned to all exporters other than Yude and
Zhenxing a margin of 85.20 percent, the margin in the petition, as
adjusted by the Department for initiation purposes.
As a result of the home market verification of Zhenxing, we have
relied on facts available in determining the quantities of the factor
inputs for coal, electricity, and labor. The number of kilowatt hours
of electricity recorded in company records did not reconcile to the
actual factory electric bills. Therefore, as facts available, we have
used the kilowatt hours reported on the actual electric bills. Because
the bill for August 1996 was missing, as facts available we have
substituted the highest monthly amount recorded on the available
electric bills. Because we were unable to reconcile the coal factor
value to company usage and inventory records, as facts available, we
have calculated the coal usage factor using the coal amounts in the raw
materials usage ledger increased by the amount of purchased coal which
could not be reconciled to the raw materials usage ledger or inventory
records. Finally, the reported labor hours did not reconcile to the
daily factory attendance sheets. Therefore, as facts available, we have
used the number of labor hours reported on the daily attendance sheets.
At the U.S. sales verification, we found that two sales of
Zhenxing's sodium sulfanilate, which falls within the scope of subject
merchandise, were sold through a trading company. On May 1, 1998, the
Department issued a supplemental questionnaire to the trading company
involved and to P.H.T. and Zhenxing. The Department received a response
from P.H.T. and Zhenxing on May 14, 1998. In this response, P.H.T. and
Zhenxing stated that the subject merchandise was never sold to the
trading company, and that the trading company acted only as a
facilitator for the export of the goods. In addition, as a part of this
response, P.H.T. and Zhenxing stated that they are not affiliated with
this trading company. As a part of the May 14, 1998 submission, the
trading company provided a letter describing the services performed by
the trading company, on behalf of Zhenxing. In order to account for
costs Zhenxing incurred in connection with these sales, we have
deducted from Zhenxing's U.S. price, as facts available, an additional
expense for brokerage and handling.
United States Price
For sales made by P.H.T. for Zhenxing, we calculated constructed
export price based on FOB prices to unrelated purchasers in the United
States. We made deductions for foreign inland freight, foreign
brokerage and handling, ocean freight, marine insurance, U.S. customs
duties, U.S. transportation, credit, warehousing, repacking in the
United States, indirect selling expenses and constructed export price
profit, as appropriate, in accordance with section 772(d)(3) of the
Act.
Normal Value
For companies located in NME countries, section 773(c)(1) of the
Act provides that the Department shall
[[Page 37531]]
determine NV using a factors of production methodology if (1) the
merchandise is exported from an NME country, and (2) the available
information does not permit the calculation of NV using home-market
prices, third-country prices, or constructed value under section 773(a)
of the Act.
In every case conducted by the Department involving the PRC, the
PRC has been treated as an NME country. Pursuant to section
771(18)(C)(i), and determination that a foreign country is an NME
country shall remain in effect until revoked by the administering
authority. None of the parties to the proceeding. has contested such
treatment in this review. Accordingly, we treated the PRC as an NME
country for purposes of this review and calculated NV by valuing the
factors of production as set forth in section 773(c)(3) of the Act in a
comparable market economy country which is a significant producer of
comparable merchandise. Pursuant to section 773(c)(4) of the Act, we
determine that India is comparable to the PRC in terms of per capita
gross national product (GNP), the growth rate in per capita GNP, and
the national distribution of labor, and that India is a significant
producer of comparable merchandise. For further discussion of the
Department's selection of India as the primary surrogate country, see
Memorandum from Jeff May, Director, Office of Policy, to Steve Presing,
dated April 22, 1998, ``Sulfanilic Acid from the PRC: Nonmarket Economy
Status and Surrogate Country Selection,'' and File Memorandum, dated
May 8, 1998, ``India as a significant producer of comparable
merchandise in the 1996/1997 administrative review of sulfanilic acid
from the People's Republic of China,'' which are on file in the Central
Records Unit (room B-099 of the Main Commerce Building).
For purposes of calculating NV, we valued PRC factors of production
as follows, in accordance with section 773(c)(1) of the Act:
To value aniline used in the production of sulfanilic acid, we used
the rupee per kilogram value of imports into India during April 1996-
December 1996, obtained from the December 1996, Monthly Statistics of
the Foreign Trade of India, Volume II-Imports (Indian Import
Statistics.) Using the Indian rupee wholesale price indices (WPI)
obtained from the International Financial Statistics, published by the
International Monetary Fund (IMF), we adjusted this value to reflect
inflation in India through the period of review. We made adjustments to
include costs incurred for freight between the Chinese aniline
suppliers and Zhenxing's factory using the minimum of (1) the distance
from the factory to the supplier or (2) the distance from the factory
to the port. The surrogate freight rates were based on truck freight
rates from The Times of India April 20, 1994, and rail freight rates
from the December 22, 1989 embassy cable for the Final Results of
Antidumping Duty Administrative Review: Shop Towels of Cotton from the
People's Republic of China (56 FR 4040, February 1, 1991) and used in
Lock Washers. These rates were inflated to be concurrent with the
period of review and have been placed on the record of this review.
To value sulfuric acid used in the production of sulfanilic acid,
we used the rupee per kilogram value for sales in India during the
period of review as reported in Chemical Weekly. We have adjusted this
value to exclude the Central Excise Tariff of India and the Bombay
Sales Tax. We made additional adjustments to include costs incurred for
freight between the Chinese sulfuric acid supplier and Zhenxing's
factory in the PRC.
Consistent with our final determination in the 1995/96
administrative review, we have used the public price quotes, in this
case those submitted by Zhenxing on December 17, 1997, which are
specific to the type and grade of activated carbon reported in the
Chinese sulfanilic acid producer's factors of production. We made
adjustments to include cost incurred for inland freight between the
Chinese activated carbon supplier and Zhenxing's factory in the PRC.
The Department's regulations (19 CFR 351.408(c)(3)) state that
``[f]or labor, the Secretary will use regression-based wage rates
reflective of the observed relationship between wages and national
income in market economy countries. The Secretary will calculate the
wage rate to be applied in nonmarket economy proceedings each year. The
calculation will be based on current data, and will be made available
to the public.'' To value the factor inputs for labor, we used the wage
rates calculated for the PRC in the Department's ``Expected Wages of
Selected NME Countries'' as revised on June 2, 1997.
For factory overhead, we used information reported in the April
1995 Reserve Bank of India Bulletin. From this information, we were
able to determine factory overhead as a percentage of total cost of
manufacture.
For selling, general and administrative (SG&A) expenses, we used
information obtained from the April 1995 Reserve Bank of India
Bulletin. We calculated an SG&A rate by dividing SG&A expenses by the
cost of manufacture.
To calculate a profit rate, we used information obtained from the
April 1995 Reserve Bank of India Bulletin. We calculated a profit rate
by dividing the before-tax profit by the sum of those components
pertaining to the cost of manufacturing plus SG&A.
To value the inner and outer bags used as packing materials, we
used import statistics for India obtained from Indian Import
Statistics. Using the Indian rupee WPI data obtained from International
Financial Statistics, we adjusted these values to reflect inflation
through the period of review. We adjusted these values to include
freight costs incurred between the Chinese plastic bag suppliers and
Zhenxing's factory in the PRC.
To value coal, we used the price of steam coal of industry reported
in Energy, Prices, and Taxes, Second Quarter 1997 published by the
International Energy Agency.
To value electricity, we used the price of electricity reported in
Energy, Prices, and Taxes, Second Quarter 1997 published by the
International Energy Agency.
To value truck freight, we used the rate reported in The Times of
India, April 20, 1994. We adjusted the truck freight rates to reflect
inflation through the period of review using WPI data published by the
IMF.
To value rail freight, we used the price reported in a December
1989 cable from the U.S. Embassy in India submitted for the Final
Results of Antidumping Duty Administrative Review: Shop Towels of
Cotton from the People's Republic of China (56 FR 4040, February 1,
1991) and added to the record of this review. We adjusted the rail
freight rates to reflect inflation through the period of review using
WPI data published by the IMF.
To value brokerage and handling, we used the brokerage and handling
rate used in the Determination of Sales at Less Than Fair Value:
Stainless Steel Bar from India, 59 FR 66915 (1994). See April 1997
Memorandum to All Reviewers from Richard W. Moreland, Acting Deputy
Assistant Secretary ``Index of Factor Values for Use in Antidumping
Duty Investigations Involving Products from the People's Republic of
China.'' We adjusted the value for brokerage and handling to reflect
inflation through the POR using WPI data published by the IMF.
To value marine insurance, we used information from a publicly
summarized version of a questionnaire
[[Page 37532]]
response in Investigation of Sales at Less than Fair Value: Sulphur Vat
Dyes from India (62 FR 42758). See April 1997 Memorandum to All
Reviewers from Richard W. Moreland, Acting Deputy Assistant Secretary
``Index of Factor Values for Use in Antidumping Duty Investigations
Involving Products from the People's Republic of China.'' We adjusted
the value for marine insurance to reflect inflation through the POR
using the Indian rupee WPI data published by the IMF.
To value ocean freight, we used a value for ocean freight provided
by the Federal Maritime Commission used in the Final Determination of
the Antidumping Administrative Review of Sebacic Acid from the PRC, 62
FR 65674 (1974). We adjusted the value for ocean freight to reflect
inflation through the POR using WPI data published by the IMF.
Preliminary Results of the Review
We preliminarily determine the dumping margin for Yude and Zhenxing
for the period August 1, 1996-July 31, 1997 to be 0.89 percent. The
rate for all other firms which have not demonstrated that they are
entitled to a separate rate is 85.20 percent. This rate will be applied
to all firms other than Yude and Zhenxing, including all firms which
did not respond to our questionnaire requests: China National Chemical
Import and Export Corporation, Hebei Branch (Sinochem Hebei); China
National Chemical Construction Corporation, Beijing Branch; China
National Chemical Construction Corporation, Qingdao Branch; Sinchem
Qingdao; Sinochem Shandong; Baoding No. 3 Chemical Factory; Jinxing
Chemical Factory; Mancheng Zinyu Chemical Factory, Shijiazhuang;
Mancheng Xinyu Chemical Factory, Bejing; Hainan Garden Trading Company;
and Shunping Lile.
Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 days of publication. Any hearing, if
requested, will be held 44 days after the publication of this notice,
or the first workday thereafter. Interested parties may submit case
briefs within 30 days of the date of publication of this notice.
Rebuttal briefs, which must be limited to issues raised in the case
briefs, may be filed not later than 37 days after the date of
publication. Parties who submit argument are requested to submit with
the argument (1) a statement of the issues and (2) a brief summary of
the arguments. The Department will publish a notice of final results of
this administrative review, including its analysis of issues raised in
any written comments or at a hearing, not later than 120 days after the
date of publication of this notice.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between the United States prices and NV may vary from the
percentage stated above. Upon completion of this review, the Department
will issue appraisement instructions directly to the Customs Service.
Furthermore, the following deposit rates will be effective with
respect to all shipments of sulfanilic acid from the PRC entered, or
withdrawn from warehouse, for consumption on or after the publication
date, as provided for by section 751(a)(2)(c) of the Act: (1) The cash
deposit rate for reviewed companies listed below will be the rates for
those firms established in the final results of this review; (2) for
companies previously found to be entitled to a separate rate and for
which no review was requested, the cash deposit rate will be the rate
established in the most recent review of that company; (3) for all
other PRC exporters of subject merchandise, the cash deposit rate will
be the China-wide rate of 85.20 percent; and (4) the cash deposit rate
for non-PRC exporters of subject merchandise from the PRC will be the
rate applicable to the PRC supplier of that exporter. These deposit
requirements, when imposed, shall remain in effect until publication of
the final results of the next administrative review.
------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter percentage
------------------------------------------------------------------------
Yude Chemical Industry, Co./Zhenxing Chemical Industry,
Co..................................................... 0.89
PRC Rate................................................ 85.20
------------------------------------------------------------------------
Notification of Interested Parties
This notice serves as a preliminary reminder to importers of their
responsibility under section 351.402 of the Department's regulations to
file a certificate regarding the reimbursement of antidumping duties
prior to liquidation of the relevant entries during this review period.
Failure to comply with this requirement could result in the Secretary's
presumption that reimbursement of antidumping duties occurred and the
subsequent assessment of double antidumping duties.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1674(a)(1)) and section 351.213
of the Department's regulations.
Dated: July 6, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-18597 Filed 7-10-98; 8:45 am]
BILLING CODE 3510-DS-M